Sunday, March 17, 2013

The problem, Ms. Merkel, is that depositors and savers in Cyprus are NOT responsible for the banks' failure.

But with her domestic election consideration to appeal to German savers, she quite willingly throws foreign savers under the bus. Nice. I suppose those German expats and retirees in Cyprus would be more than happy to be run over by the bus to do their fair share.

So much for the EU solidarity.

The UK's Daily Mail says the UK government will compensate 3,000 British military personnel for the haircut but 60,000 other Britons who hold accounts in Cypress are on their own.

The great EU bank robbery: British taxpayers to bail out victims of outrageous raid

UK taxpayers will have to compensate thousands of Britons hit by a shock raid on bank accounts in Cyprus.

The debt-stricken island, which is home to around 3,000 British military personnel and civil servants, is being given an £8.7billion EU rescue package.

But – in a move condemned as ‘robbery’ – Germany says it will not fund the emergency deal unless every saver with a deposit account contributes via a bank tax.

...In response to cries of outrage, Cypriot president Nicos Anastasiades was last night trying to amend the bailout tax to limit the pain for small depositors.

But Angela Merkel insisted it was right that all depositors in Cypriot banks should share the responsibility of bailing out the state.

Addressing an election rally, the German chancellor insisted: ‘Anyone having their money in Cypriot banks must contribute in the Cypriot bailout. That way those responsible will contribute in it, not only the taxpayers of other countries, and that is what’s right.’

(Full article at the link)

Germany's Commerzbank suggests Italy be the next, skipping the periphery.

Japan's Nikkei opened Monday over 200 points down, and are staying down at minus 264. The US Dow futures is down 127, the UK's FTSE futures down 110 points.

By the way, Nikkei Shinbun calls this theft very mildly as "surcharge" (課徴金).

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comments:

"Italy next"? It's clear then that the Cyprus armed robbery (it has no other name) is blackmail to Italian politicians and citizens, as well as others: see we can blow up Cyprus and we can do the same with Italy. Problem is that Italy is 60 times the size of Cyprus and if Italy choses a dissident path, then the Eurozone will be seriously hurt.

BTW, when are those always coming German elections that Merkel won't win no matter what she does?

The problem with Cyprus is that it is one of the most unstable place of the eurozone with both Greece and Turkey fighting over the land, and the British being stationed there.

Now if things turn ugly as they did in Greece, it might not going to be just riots, it could start a real war if one of the parties sees that as an opportunity to gain land.

But that's OK for Mrs Merkel because anyway she doesn't have any army that would have to be sent to peace things (just look at the help received by France for their operation in Mali...they only get help from the US and Chad, Germany is still thinking about maybe sending few planes for logistic support - if it doesn't cost too much)

Addressing an election rally, the German chancellor insisted: ‘Anyone having their money in banks must contribute in the bailouts. That way those responsible will contribute in it, not only the taxpayers of other countries, and that is what's right.’

Miss out Cyprus and you have a very scary situation worth a jolly good bank run. s that in fact what Murkle wants?

"Err, so tax payers all over the EU who fund/back the bailouts are "more responsible" for the banks' failure?"

The ones to pay are stockholders. And banks should be let to fail in a free market anyhow. What does not make any sense is that citizens have to pay in any way for the mismanagement of private business: they should be let to fall and then, if appropriate, the state gets the remnants for 1 cent, after due bankruptcy (so the res publica does not inherit the debts).

One cent is all the citizens should have to pay,

Anyhow, part of the problem is that in a credit crisis, Germany and the eurocrats are pushing for greater capitalization of banks, so banks can't really do business as normal and in some cases "need" bailout when they really don't need it at all.

All this is sapping the economy to untenable levels. Cyprus may be "irrelevant" but what happens when all this is translated to Italy, Spain, France or even Germany (whose savings banks are in delicate situation as well)?

It will happen one way or another. It is happening in fact. The EU is imploding and it's the largest global economic unit. It may still continue this way for one or several years... but this is clearly going down.

Just imagine a hundred thousand million of more of highly educated workers unemployed without welfare, another similarly large figure of retirees without pension nor savings... Feel the anger boiling, not in Nicosia but in Paris, Düseldorf, London, Milan, Berlin...

If we don't get killed in the chaos, we'll see that with our own eyes.

==All this is sapping the economy to untenable levels. Cyprus may be "irrelevant" but what happens when all this is translated to Italy, Spain, France or even Germany (whose savings banks are in delicate situation as well)?==

If the crisis hits France and Germany, the money printing presses will be turned on and the problem solved by increasing inflation. This is how it was done in Greece before the Euro. So the crisis cannot hit the EU as a whole - it only exists as long as the majority of EU countries are against the "inflation tax".

The main problem with the Euro is that all participant countries must have the same fiscal policy. This is obviously not working, and offender states must be expelled from Eurozone. In fact one doesn't have to "expell" them - if they don't get help, they will have no other choice but reintroduce their own currencies.

Cyprus is a democratic country, and its citizens are responsible for their government's actions. If the government fails to oversee banks, they must lose their savings as a consequence. If there is anything outrageous about the whole story, it is that other EU taxpayers are forced to give every Cypriot almost 10K Euros.

The crisis is already hitting them, let's not be naive. Just that obviously weaker links (Southern countries essentially) break first.

I doubt that when they turn on the printing machine will help at all. First they will delay that to the very last minute out of ideological stubbornness, second it is already way too late. The euro should have been devalued in 2008 if not earlier, we are already five years late and the economy of the continent is ravaged. Printing, as the British did, may gain you some time, but in the end it is not enough, unless the state is actively investing in real economy and the foreign (extra-continental) competitors are kept under some constraint by means of some kind of protectionism. WTO dogma has destroyed all those defense lines and IMF dogma has sunk the ship altogether.

It's already too late. Merkel is like Marie Antoniette: denying a reality of the exhaustion of a whole socio-economic system, which is imploding as we speak. This Cypriot "corralito" only shows that the escalation of socio-economical disasters is, far from nearing any end, escalating wildly.

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